PRIDE STAR DEVELOPMENT BANK, INC.

AUDIT COMMITTEE CHARTER

PURPOSE
The Audit Committee of Pride Star Development Bank (the Bank) is appointed by the
Board to assist the Board in monitoring (1) the integrity of the financial statements of the
Bank, (2) the Banks financial reporting and control, and (3) the independence and
performance of the Banks internal and external auditors.
APPOINTMENT, MEMBERSHIP AND QUALIFICATIONS
The Board shall appoint the members of the Audit Committee. The Audit Committee
shall be composed of members of the board of directors, at least two (2) of whom shall
be independent directors, including the Chairman,
The members of the Audit Committee shall meet the independence and experience
requirements of the Bangko Sentral ng Pilipinas which, among other requirements,
require that the members of the Audit Committee have accounting, auditing, or related
financial management expertise or experience.
AUTHORITY AND RESPONSIBILITY
The Audit Committee shall be responsible for the setting up of the internal audit
department and for the appointment of the internal auditor as well as the independent
external auditor who shall both report directly to the Audit Committee. It shall monitor
and evaluate the adequacy and effectiveness of the internal control system.
The audit committee shall have authority to investigate any matter within its scope, full
access to and cooperation by management and full discretion to invite any director or
executive officer to attend its meetings, and adequate resources to enable it to
effectively discharge its functions.
FUNCTIONS
The Audit Committee shall:
1. Review the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval.
2. Review the annual audited financial statements with management, including major
issues regarding accounting and auditing principles and practices as well as the
adequacy of internal controls, including financial, operational and compliance controls,
that could significantly affect the Banks financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection with the
preparation of the Banks financial statements.
4. Review with management and the independent auditor the Banks quarterly financial
statements.
5. Meet periodically with management to review the Banks major financial risk exposure
and the steps management has taken to monitor and control such exposures.
6. Review major changes to the Banks auditing and accounting principles and practices
as suggested by the independent auditor, internal auditors or management.
7. Recommend to the Board the appointment of the independent auditor, who is
ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor.
9. Review the significant reports to management prepared by the internal auditing
department and managements responses.
10. Meet with the independent auditor prior to the audit to review the planning and the
staffing of the audit.
11. Review with the independent auditor any problems or difficulties the auditor may
have encountered and any management letter provided by the auditor and the Banks
response to that letter. Such review should include:
Any difficulties encountered in the course of the audit work, including any
restrictions on the scope of the activities or access to required information.
Any changes required in the planned scope of the independent audit.
12. Prepare the reports required by the rules of the applicable regulatory authorities.
13. Review with the Banks management those matters that may have a material impact
on the financial statements, the Banks compliance policies and any material reports or
inquiries received from regulators or government agencies.
14. Establish and maintain mechanisms by which officers and staff may, in confidence,
raise concerns about possible improprieties or malpractices in matters of financial
reporting, internal control, auditing or other issues to persons or entities that have the
power to take corrective action.
15. Ensure that arrangements are in place for the independent investigation,
appropriate follow-up action, and subsequent resolution of complaints.
16. Meet at least annually with the Treasurer and the independent auditor. While the
Audit Committee has the responsibilities and powers set forth in this Charter, it is not
the duty of the Audit Committee to plan or conduct audits or to determine that the
Banks financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. This is the responsibility of management and
the independent auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditor.
REPORTING
Since the Committee consists of Board members, no additional reporting from the
Committee to the Board is required.